Octavio Frias, who ran a Dominican nosh shop in Washington Heights, gave the ill-fated man a hug as a secret signal to two hit men, jurors were told in Manhattan federal court.

Frias, who also helped serve up cocaine and heroin at the El Baturro restaurant at 1490 St. Nicholas Ave., near 185th Street., was found guilty of participating in the murder of Mario Lobo, after a seven-day trial.

Jurors were told that Frias, 49, and another drug pusher, Roberto Martinez-Martinez, hired the hit men for $20,000 in September 1991 to murder Lobo, who had a stake in the El Baturro narcotics trade.

The restaurateur also agreed to point out the target.

As the hit men, armed with a .380 semiautomatic and an Uzi, waited at the restaurant bar, Frias gave Lobo the hug of death while the victim was sitting at a table tucking into a meal, prosecutors Jay Musoff and Josh Goldberg told the court.

Lobo was shot in the head from behind, jurors were told.

Frias could be handed a life sentence and a $250,000 fine after being convicted Wednesday. He will be sentenced June 16.

Since the killing, the El Baturro has changed its name to The Bahamas.